LEADING IPO experts yesterday warned London is not an attractive place for fast growing tech firms to go public and institutional investors are reluctant to deal with the sector.
“From a tech perspective London is dead,” Tim Bunting of Balderton Capital told 200 people at the first City A.M. IPO roundtable.
“Looking at the IPO market, if you’re a big cap at the right price it’s open. If you’re smaller or have a technology element then it’s extraordinarily difficult.”
Anne Richards, chief investment officer at Aberdeen Asset Management, agreed that the UK market has a “longer institutional memory” than the US which clouds decision-making.
“There is still a memory of 1999-2000 when immature businesses came to market and failed quite spectacularly.”
Craig Coben, who runs EMEA equity capital markets at event host Bank of America Merrill Lynch, bemoaned the focus on large firms: “My colleagues in the US do $70m, $80m IPOs of growth companies on a regular basis. We don’t have that here – we just tend to big IPOs.”
All the panel members did agree on one thing – a wish to reduce the number of banks who work on each IPO, with Cobden citing one recent Asian deal that involved 26 bookrunners.
“If there were to be a rule that said there could never be more than three banks in a single deal then it would be a far more rational way to approach these things,” said Goldman Sachs’ Alasdair Warren.
And Reinout Koopmans of Jefferies backed the use of IPO advisers to help pick banks to join a syndicate on the basis that “many directors only do it once in a lifetime”.